Revolut CEO Nikolay Storonsky told Business Insider India in early April that the UK neobank would expand to India in 2021. He spoke rather broadly, specifying only that the said the initial investment would be US$20-25 million and that Revolut would apply for a payments and trade license.
This move follows a February announcement in which Revolut said it would introduce instant free-of-charge global remittances to and from India as its flagship product in the subcontinent. The UK neobank has been in discussions with the Reserve Bank of India, local banks and fintech startups to set up the borderless accounts for Indians.
Revolut will not find India an easy nut to crack. Google, PhonePe and Paytm together control more than 90% of UPI payments, while WhatsApp Pay recently entered the market. Revolut’s mooted financial super app is unlikely to find many takers in India, a fragmented market where users are accustomed to using different fintech services. Even homegrown Paytm has struggled to centralize multiple services under its single app. Paytm offers payments, stock trading, insurance sales, wealth management, digital gold, and more. It has spent heavily to promote these services, without a lot to show for those efforts yet. Paytm did not see significant revenue growth in FY 2020.
One of the products Revolut is banking on to drive revenue growth will not be available in India: cryptocurrency trading. The UK neobank recently added 11 new cryptocurrencies for its UK and EU customers to trade. However, India reportedly plans to propose a law banning cryptocurrencies, fining anyone trading in the country or even holding such digital assets. The bill is likely to become law as Prime Minister Narendra Modi’s government has a solid majority in parliament.
At the same time, India is tightening oversight of foreign fintech investment, with a focus on preventing foreign domination of the sector. The most recent example of this mindset is the rule that caps third-party payment firms’ monthly UPI transactions market share at 30%. It is no coincidence that the rule came into effect at a time when Google Pay and Walmart-backed PhonePe have the largest market share.
Storonsky seems to think Revolut could acquire a local Indian fintech to ensure the UK neobank got the necessary licenses. “If you have a product that takes a long time to get a licence, in that case we may partner. We are still investigating all possibilities, but most likely will go through the organic route by applying for our own licenses,” he said.